Ten-year JGB yield stays at 2-month low, longer-dated underperform

Reuters Staff

2 Min Read

TOKYO, July 24 (Reuters) - Yields on benchmark 10-year Japanese government debt dipped on Wednesday, matching a two-month intraday low touched in the previous session after the Bank of Japan offered to buy more bonds as part of its stimulus drive to revive the economy.

* Longer-maturities underperformed, ahead of the Ministry of Finance’s auction of 1.2 trillion yen ($12 billion), 20-year bonds on Thursday, leading a steepening in the long-end of the yield curve.

* The 10-year yield was down 0.5 basis point at 0.770 percent, while 10-year JGB futures added 0.06 point to 143.76, hovering near a two-month intraday high of 143.85 hit on Tuesday.

* “We have the BOJ operations that have been more active than before,” said Maki Shimizu, senior strategist at Citigroup in Tokyo. “When there is no major catalyst in the market, that’s when the BOJ operations have become more notable.”

* The BOJ offered to buy 950 billion yen worth of JGBs with residual maturities from one to 10 years. The Japanese central bank stunned financial markets on April 4, promising to inject $1.4 trillion into the economy in less than two years.

* The JGB market shrugged off further evidence of slowing growth in China after activity in the country’s manufacturing sector slowed to an 11-month low in July as new orders faltered and the job market darkened.

* Hurt by the slowdown in China, Japan’s exports rose less than expected last month.

* “If (China) goes into recession, that’s another story. So far we don’t see heightened risk for that,” Shimizu said, adding that the market was more focused on next week’s U.S. nonfarm payrolls data, which could give further clarity on when the Federal Reserve is likely to scale back its $85 billion a month bond-buying programme.

* The 20-year yield added 1 basis point to 1.725 percent, while the 30-year yield was up 1.5 basis points at 1.855 percent.